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BPK raises concern about govt's ability to service debt
The BPK has expressed concern over the national debt, noting that the country's interest payments amounted to 19.06 percent of state revenue last year, far exceeding the IMF's recommended 7 to 10 percent.
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Supreme Audit Agency (BPK) chairman Agung Firman speaks at a House of Representatives plenary meeting on June 22, 2021 in Jakarta. (Screenshot/-)
T
he Supreme Audit Agency (BPK) has warned the government over a potential decline in its ability to service its increasing debt, after it hiked state spending in 2020 to finance economic stimulus measures as part of the national pandemic response.
BPK chairman Agung Firman Sampurna said that interest payments on national debt relative to government revenue stood at 19.06 percent last year, much higher than the 7 percent to 10 percent recommended by the International Monetary Fund (IMF).
Meanwhile, government debt-to-revenue ratio was 369 percent, also far exceeding the IMF-recommended threshold of 90 to 150 percent.
“The uptrend in government debt and interest cost exceeds growth in GDP and state revenue, which is cause for concern over the declining ability of the government to make debt and interest payments,” Agung told a House of Representatives plenary meeting on Tuesday.
The COVID-19 pandemic prompted the government to increase public spending to finance a stimulus package that accounted for 3.8 percent of GDP, and at a time when revenue was declining as the economy plunged into its first recession in more than two decades.
Read also: COVID-19 surge will hamper Q2 GDP growth: Sri Mulyani
As a result, fiscal deficit grew to 6.09 percent of GDP last year from around 2 percent in 2019. The government has estimated this year’s deficit at 5.7 percent of GDP, but it expects fiscal consolidation to bring the figure down below the previous 3 percent deficit cap by 2023.
